# Table 5: Absorptive Capacity

*Flow variable: log_predicted_demo_inflows*


## Capital Deepening

| Model | N | R² | Flow β | Interaction β | Int. p |
|-------|---|-----|--------|--------------|--------|
| Baseline: K/L Growth | 2995 | 0.0148 | 0.0017 |  |  |
| K/L Growth × Financial Depth | 2995 | 0.0180 | 0.0002 | 0.0000 | 0.0736 |
| K/L Growth × Institutions (Rule of Law) | 2837 | 0.0119 | 0.0018 | 0.0043 | 0.0285 |
| K/L Growth × Human Capital (PWT) | 2529 | 0.0363 | -0.0050 | 0.0035 | 0.1986 |
| K/L Growth × Human Capital (Panel) | 2529 | 0.0363 | -0.0050 | 0.0035 | 0.1986 |
| K/L Growth × Income Quartile | 2995 | 0.0161 | -0.0006 | 0.0049 | 0.0446 |
| Portfolio → K/L | 2995 | 0.0142 |  |  |  |
| FDI → K/L | 2995 | 0.0184 |  |  |  |


## Investment/GDP

| Model | N | R² | Flow β | Interaction β | Int. p |
|-------|---|-----|--------|--------------|--------|
| Baseline: Investment/GDP | 2590 | -0.0037 | -1.0457 |  |  |
| Investment/GDP × Financial Depth | 2590 | -0.0042 | -0.9410 | -0.0007 | 0.3832 |
| Investment/GDP × Institutions (Rule of Law) | 2461 | -0.0043 | -1.1191 | -0.8109 | 0.0034 |
| Investment/GDP × Human Capital (PWT) | 2280 | -0.0102 | 1.9010 | -1.2409 | 0.0004 |
| Investment/GDP × Human Capital (Panel) | 2280 | -0.0102 | 1.9010 | -1.2409 | 0.0004 |
| Investment/GDP × Income Quartile | 2590 | 0.0320 | -2.2841 | 0.9666 | 0.2336 |
| Portfolio → Invest | 2590 | -0.0079 |  |  |  |
| FDI → Invest | 2590 | -0.0141 |  |  |  |

*p<0.1, **p<0.05, ***p<0.01
